Conventional Loans

MCM Mortgage
Oct 26
2 min read

A conventional loan is not offered or secured by a government entity; however, it can be guaranteed by both Fannie Mae and Freddie Mac, two government-sponsored enterprises.

This loan is a great fit for those who might have great credit and can afford a large down payment (although a large down payment isn't always required – it can help you eliminate paying private mortgage insurance). Whatever your long - or short-term goals are, a conventional mortgage can help you meet them.

Fixed-Rate vs. Adjustable-Rate Mortgages

With a conventional loan, you can choose from a fixed-rate mortgage or an adjustable-rate mortgage, also known as an ARM. Here's how they differ:

Fixed-Rate Mortgages	Adjustable-Rate Mortgages (ARM)
You can rest knowing your interest rate won't increase with volatile market rates.	There are caps set on ARMs to protect against rate increases.
You may also benefit from refinancing later on if market rates decrease.	ARMs are available in a variety of configurations and term lengths, the most common being 5/6, 7/6/, & 10/6. The 1st number is the number of years, and the interest is fixed. The 2nd number is the time in months during which the interest rate could change (adjustment period)
With a fixed-rate mortgage, your mortgage interest rate and payments will be consistent throughout the duration of your loan.	Rates may increase or decrease during adjustment periods. Your monthly payments may be higher or lower, respectively.
Fixed-rate mortgages are available in a variety of term lengths ranging from 10 years to 30 years.	An ARM can save you money on your loan, especially if you'll be living in the home only for a few years.